Costa Rica advances project to tax platforms like Airbnb

This article was written and published in Spanish and has been translated into English via Google Translate. Click here to read the original article.

During the month of August the deputies could come to a conclusion in a plenary, on file 20.865 that seeks to tax and give greater security to the users of digital platforms for non-traditional hosting.

The initiative discussed in the Committee on Economic Affairs has already met the second day of motions via article 137 (those that propose changes to the text).

The project obliges people who currently offer this type of accommodation to pay a municipal “patent” annually according to the number of rooms offered.

In addition to the obligation to register with Direct Taxation, comply with minimum services and deliver electronic invoices.

The project also contemplates that the non-traditional hosting service provider must register with the Costa Rican Tourism Institute (ICT), and the General Directorate of Taxation, as well as pay a special contribution (which functions as a commercial patent) to the corresponding municipality, to exercise the lucrative activity.

This contribution is determined in the project in a phased manner in percentages depending on the maximum number of guests they can accommodate.

For example, if they are two guests, you will have to pay 10% of the base reference salary set today at ¢ 442,200 colones (approximately US$770). That is, the payment of the annual special contribution to be able to function would be ¢ 44,620 (approximately US$78) in this case.

For those who offer up to 5 guests, the percentage to be paid is 30% of the base salary, that is ¢ 133,860 (approximately US$234) per year.

And for those who have 6 or more guests, the annual payment to the municipality will be ¢ 356,960 (approximately US$624).

If the property has several homes, apartments, villas, chalets, bungalows, rooms or others, the special contribution must be paid separately, the bill states.

Deputy Roberto Thompson, who chairs this commission, stressed that it is necessary to promote the attraction of tourists, "this initiative benefits the tourist by ensuring greater security on the place where they will be staying."

Unfair Competition

The Chamber of Hotels and businessmen in this sector have insisted on the regulation of what they consider to be unfair competition.

Hoteliers pay 13% sales tax (current VAT), 10% services, 30% rent, water, electricity, insurance, social security, among other charges.

The country's hotel industry represents about 50,000 rooms, while what represents non-traditional lodging, there are about 13,000 units that are rented for vacations, which represents 20 to 25% of the total lodging inventory of the country.

In the month of December 2018 alone, this informal hosting industry invoiced just over ¢ 15 billion (approximately US$26 million), which would have generated ¢ 1,990 million (approximately US$3 million) only in sales tax of the current VAT.

This article was written and published in Spanish and has been translated into English via Google Translate. Click here to read the original article.

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